WEBVTT - Breaking Down Retail Sales and Higher for Longer Rates 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio news. 0:00:11.960 --> 0:00:15.560 This is the Bloomberg Surveillance Podcast. I'm Tom Keene along 0:00:15.600 --> 0:00:18.960 with Paul Sweeney. Join us each day for insight from 0:00:18.960 --> 0:00:23.119 the best in economics, finance, investment, and international relations. You 0:00:23.160 --> 0:00:26.520 can also watch the show live on YouTube. Visit the 0:00:26.520 --> 0:00:31.280 Bloomberg Podcast channel on YouTube to see the show weekday 0:00:31.280 --> 0:00:34.320 mornings from seven to ten am Eastern from our global 0:00:34.360 --> 0:00:39.000 headquarters in New York City. Subscribe to the podcast on Apple, Spotify, 0:00:39.360 --> 0:00:42.920 or anywhere else you listen and always I'm Bloomberg Radio, 0:00:43.080 --> 0:00:47.599 the Bloomberg Terminal, and the Bloomberg Business App. Jeffrey Rosenberg 0:00:47.680 --> 0:00:50.120 joins us now with Blackrock, and it's not in a 0:00:50.159 --> 0:00:53.240 FED day. We're all lathering about the FED, so Jeff, 0:00:53.280 --> 0:00:56.240 we're not going there right now. Jeff, what are you 0:00:56.320 --> 0:01:02.680 doing in a system system systematic bond portfolio, a mixed 0:01:02.760 --> 0:01:07.040 multisector bond portfolio when spreads are priced to perfection? What 0:01:07.160 --> 0:01:10.560 does your action plan is? Do you adjust into the 0:01:10.600 --> 0:01:11.240 second half? 0:01:12.280 --> 0:01:14.920 Yeah, it's a great question, Tom, because you know, spreads 0:01:14.959 --> 0:01:18.959 are not particularly attractive. You know, we're at or through 0:01:19.160 --> 0:01:22.200 mid cycle tights, so there's not a lot of kind 0:01:22.240 --> 0:01:27.240 of anticipation of price performance from spread compression here and 0:01:27.319 --> 0:01:31.360 so generally it's a more defensive positioning because you've got 0:01:31.360 --> 0:01:35.000 more downside than upside. But your upside is basically the carry, 0:01:35.600 --> 0:01:38.639 and the carry is attractive mostly for the total yield, 0:01:39.160 --> 0:01:43.040 less for the spread. You know, So we've been allocating 0:01:43.200 --> 0:01:47.320 you know, less than we would otherwise be to the 0:01:47.360 --> 0:01:50.760 lower end of high yield. There's a bit of a 0:01:50.760 --> 0:01:55.760 different story there, and a bifurcation, really big bifurcation kind 0:01:55.800 --> 0:01:59.040 of mirrors the bifurcation that we see between say, you know, 0:01:59.120 --> 0:02:02.920 small caps large caps in the equity world, and that 0:02:03.000 --> 0:02:06.000 bifurcation is kind of double be's to triple c's. That's 0:02:06.040 --> 0:02:08.800 where you really see a very different part. 0:02:08.600 --> 0:02:09.200 Of the market. 0:02:09.320 --> 0:02:11.840 So you got to play a lot more defense in 0:02:11.919 --> 0:02:15.280 that part of the market. It is pricing appropriately for 0:02:15.440 --> 0:02:19.799 the default risk aggregate. The default risks are very low, 0:02:19.840 --> 0:02:22.160 so we feel pretty good about the spread exposure that 0:02:22.200 --> 0:02:25.720 we're taking. We think you can take that spread exposure. 0:02:25.760 --> 0:02:28.320 But again you got to think about that as as 0:02:28.440 --> 0:02:30.000 carry and not price appreciation. 0:02:30.120 --> 0:02:34.440 Paul Sween the here it is the Bloomberg Total Return Fund, 0:02:34.480 --> 0:02:37.720 the old Lehman Index, Bloomberg has it now. It's definitive 0:02:38.040 --> 0:02:40.960 a breakout price up, yield down. I got a little 0:02:40.960 --> 0:02:44.880 better price performance and the total return index exactly. 0:02:46.320 --> 0:02:50.080 Tom Jeffery got his master's in computational financier. 0:02:49.880 --> 0:02:51.320 Curdie Curdie Melon. 0:02:51.400 --> 0:02:52.359 I mean, that's meth right. 0:02:52.480 --> 0:02:54.359 He sat there one day and he looked at Tepper 0:02:54.360 --> 0:02:56.960 and he said, should I go robots or Temper? And 0:02:57.000 --> 0:02:58.520 he went Temper. He went Tepperate. 0:02:58.639 --> 0:03:01.800 I mean, who doesn't computation finance MC Carnegie mellon way 0:03:01.800 --> 0:03:04.720 too much? Meth so, Jeffrey, Tom was calling out earlier 0:03:04.720 --> 0:03:07.400 today he noticed that the Home Depot comes to the 0:03:07.400 --> 0:03:10.320 market with a ten billion dollar debt offering. They had 0:03:10.360 --> 0:03:13.640 forty seven billion dollars in demand. Talk to us about 0:03:13.639 --> 0:03:16.480 the investment grade market. People are just dying to get 0:03:16.520 --> 0:03:18.680 paper and get yield. Is that kind of where you 0:03:18.720 --> 0:03:20.680 take away from a deal like Home Depot. 0:03:21.480 --> 0:03:21.799 Yeah. 0:03:21.880 --> 0:03:24.240 I mean if you look in the credit markets, and 0:03:24.280 --> 0:03:26.800 I talked about, you know, probably the weakest part of 0:03:26.800 --> 0:03:29.239 the public credit markets, which is kind of triple C 0:03:29.639 --> 0:03:32.000 part of high yield, But if you talk about investment grade, 0:03:32.400 --> 0:03:36.040 it's a very different story. And really again this mirrors 0:03:36.080 --> 0:03:39.000 this kind of small cap large cap story in terms 0:03:39.040 --> 0:03:43.520 of what company's interest rates sensitivity is. Right, A lot 0:03:43.560 --> 0:03:47.320 of questions about, you know, where is the bite of 0:03:47.440 --> 0:03:50.400 higher interest rates being felt, and it is really this 0:03:50.520 --> 0:03:53.760 kind of bifurcation that we're seeing, and the investment grade 0:03:53.880 --> 0:03:58.280 side is really well prepared and well positioned. Partly that 0:03:58.360 --> 0:04:00.400 was because we had such a long peer period of 0:04:01.120 --> 0:04:06.080 zero and low interest rates that allowed companies to really 0:04:06.120 --> 0:04:10.320 fortify their balance sheets extend debt maturities. Most of the 0:04:10.360 --> 0:04:14.280 investment grade cap stack is in fixed rate debt with 0:04:14.720 --> 0:04:20.520 long maturities, and so you're seeing very strong interest coverage 0:04:20.960 --> 0:04:24.440 performance even in an environment where you'd expect some degradation 0:04:24.600 --> 0:04:26.839 given the increase in interest rates, and there's just not 0:04:26.960 --> 0:04:31.200 that much rollover that's happening. So the fundamental side of 0:04:31.279 --> 0:04:36.120 investment grade credit risk is very supportive. You have a 0:04:36.160 --> 0:04:41.400 tremendous amount of demand and you haven't had an incentive 0:04:41.800 --> 0:04:44.479 and this is the first case in a very long time, 0:04:44.520 --> 0:04:47.360 you haven't had an incentive for issuers to kind of 0:04:47.480 --> 0:04:51.080 front run or front load I should say front load. 0:04:51.560 --> 0:04:54.440 They're refinancing. What they're doing is they're pushing it out 0:04:54.520 --> 0:04:57.839 obviously because the coupons that they have on their balance 0:04:57.880 --> 0:05:00.200 sheets are the lowest ones that they're going to have have, 0:05:00.839 --> 0:05:04.679 So it's reducing the amount of kind of rollover issuance 0:05:04.720 --> 0:05:06.760 that you would otherwise have. And so when you see 0:05:06.760 --> 0:05:09.000 these new issues come to market, there's just there's just 0:05:09.040 --> 0:05:12.280 a lot more demand for them. As you're highlighting in 0:05:12.320 --> 0:05:13.400 the some debot case. 0:05:13.240 --> 0:05:16.880 John Templeton years ago, there will be a shortage of bonds. 0:05:17.000 --> 0:05:20.680 You say, demands insane. Paul correctly brings up home depot 0:05:20.680 --> 0:05:23.400 where we had one hundred I can't remember now, we 0:05:23.440 --> 0:05:25.479 had like a one hundred and thirty seven b pick 0:05:25.560 --> 0:05:28.520 up in the forty year yield from what was expected, 0:05:28.560 --> 0:05:32.640 a lower yield, a more attractive return because of demand. 0:05:33.040 --> 0:05:36.279 Jeff Rosenberg, is there a shortage of bills, notes and bonds? 0:05:37.720 --> 0:05:40.040 Well, Tom, we got to be a little careful about 0:05:40.080 --> 0:05:43.880 about that, because you know, we're going to switch the 0:05:43.960 --> 0:05:49.080 lens from corporate issuance, where balance sheets have been you know, strengthened, 0:05:49.320 --> 0:05:54.080 they've extended debt maturities, they've been relatively conservative, specially on 0:05:54.120 --> 0:05:57.359 the investment grade side, and then flip the lens to 0:05:57.480 --> 0:06:02.039 the government side, US treasure issuance. We have a very 0:06:02.040 --> 0:06:06.960 different picture, and obviously that's the fiscal debate, the unsustainability 0:06:06.960 --> 0:06:11.080 of fiscal policy, the increasing amount that the private sector 0:06:11.120 --> 0:06:15.360 will have to fund that issuance, and the eventual raising 0:06:15.839 --> 0:06:20.080 of treasury coupon sizes you know, been hanging out kind 0:06:20.120 --> 0:06:22.400 of in bills here, But we're going to have some 0:06:22.560 --> 0:06:25.279 pressure eventually. We think that pressure will show up in 0:06:25.320 --> 0:06:27.400 the back end, and it's not going to be a 0:06:27.440 --> 0:06:30.919 case of too little supply. It's going to be a 0:06:30.960 --> 0:06:35.359 case of the markets having to digest ever increasing amounts 0:06:35.360 --> 0:06:38.000 of supply, and that we think, you know, is going 0:06:38.080 --> 0:06:41.360 to end up being a pricing story for the back 0:06:41.440 --> 0:06:43.080 end of the curve. So it's going to be a 0:06:43.160 --> 0:06:45.719 different story than what you're talking about here for the 0:06:45.760 --> 0:06:46.719 investment grade market. 0:06:46.720 --> 0:06:48.760 And Jeff, the next time you're on, I want to 0:06:48.800 --> 0:06:51.839 talk about medig Lean and Miller, who at your Carnegie 0:06:51.839 --> 0:06:56.560 Mellon invented how we think about capital structure. But just 0:06:56.680 --> 0:06:59.479 simply to say, are we going to see new corporate 0:06:59.520 --> 0:07:03.400 bondation wins like what home Depot did yesterday? Yes, this 0:07:03.440 --> 0:07:06.360 week looks like a thirty billion dollar week. Is one 0:07:06.360 --> 0:07:07.600 of the reports from Bloomberg. 0:07:09.920 --> 0:07:15.280 Yeah, I mean in terms of optimal debt structure. I think, 0:07:15.320 --> 0:07:18.080 you know, particularly again on the investment grade side, a 0:07:18.080 --> 0:07:20.840 lot of companies you know, got to the right point 0:07:21.240 --> 0:07:26.080 given the prior interest rate tax regime. Another thing that 0:07:26.120 --> 0:07:28.280 we're going to talk about here, you know, as we 0:07:28.440 --> 0:07:31.840 moved through the election and the fiscal policy debate is 0:07:32.360 --> 0:07:35.320 corporate taxes. And you know, it's the proper tax rate 0:07:35.400 --> 0:07:38.680 and the deductibility of interest, you know, and and and 0:07:38.800 --> 0:07:41.120 there were some changes in the tax code that limited 0:07:41.160 --> 0:07:45.960 the deductibility for highly leveraged firms. That changes the optimal 0:07:46.120 --> 0:07:48.720 default point. But for investment grade companies, as you see 0:07:48.720 --> 0:07:51.240 that tax rate goes up, you know, you may see 0:07:51.480 --> 0:07:55.000 you know, some more attractiveness in terms of issue ins 0:07:55.040 --> 0:07:57.600 and that can shift how much issuance we're getting. 0:07:57.600 --> 0:08:01.840 Are that tax we're out of Jeff Rosenberg never enough 0:08:01.840 --> 0:08:13.920 time with Blackrock, thank you. We have in the studios 0:08:14.480 --> 0:08:17.560 the number one voice and retail and we're gonna go 0:08:17.640 --> 0:08:20.880 to luxury because that's what's out there. 0:08:21.440 --> 0:08:22.640 And Tom another CJ. 0:08:22.760 --> 0:08:25.880 Lawrence, Yeah, I know, she's gifted. I mean, she's gifted. 0:08:25.920 --> 0:08:26.120 C J. 0:08:26.280 --> 0:08:28.440 Lawrence and all that. Dan, I'm gonna cut to the chase. 0:08:28.880 --> 0:08:32.679 The Lewis Viewton store at fifty seventh Street in Fifth 0:08:32.720 --> 0:08:36.720 Avenue is a gorgeous modern white glass store of windows 0:08:36.720 --> 0:08:40.480 that I can't afford our No wants to bulldoze it 0:08:40.640 --> 0:08:45.800 and build a new building. Five people have said why why? 0:08:46.400 --> 0:08:51.280 The reason why companies, especially luxury companies, reinvest because the 0:08:51.360 --> 0:08:53.920 ante keeps going up and you have to be able 0:08:53.960 --> 0:08:57.800 to give new experiences to that luxury consumers that they'll 0:08:57.840 --> 0:09:01.000 pay those dollars for those luxury items. Look what he's 0:09:01.000 --> 0:09:03.880 got across the street. He spent a fortune on Tiffany. 0:09:04.240 --> 0:09:07.400 The Louis Vuitton store hasn't been touched in years. Right, 0:09:07.600 --> 0:09:10.600 if he needs to be have another brand that is 0:09:10.679 --> 0:09:13.079 on the same part you have to invest. 0:09:12.960 --> 0:09:15.960 Is luxury the AI we don't talk about. I'm looking 0:09:16.000 --> 0:09:21.000 at Aermez's estimated forward pe. It comes down Paul to 0:09:21.080 --> 0:09:24.120 forty seven times earnings. I mean, help me here with 0:09:24.200 --> 0:09:26.440 the effervescence of the luxury business. 0:09:26.920 --> 0:09:29.880 Is it in Nvidia like it feels like it is 0:09:30.040 --> 0:09:33.840 for one reason, the creative products that they have, but 0:09:33.960 --> 0:09:37.640 the continued expanding customer base. Baby boomers, one of the 0:09:37.679 --> 0:09:41.320 wealthiest generations, is passing down that wealth to millennials. You 0:09:41.360 --> 0:09:44.320 look at the Chinese consumer and see what's. 0:09:44.040 --> 0:09:47.360 China doing right now? It's a bloom bloom. I know 0:09:47.800 --> 0:09:49.880 you're the only one I know optimistic on. 0:09:49.840 --> 0:09:52.560 China now, not optimistic on it. You were still having 0:09:53.080 --> 0:09:56.480 very cautious trends out of China where the Chinese are spending, 0:09:56.640 --> 0:10:00.240 or within China or within other local Asia regions. Not 0:10:00.320 --> 0:10:02.839 seeing a return really to Europe. You're not seeing a 0:10:02.880 --> 0:10:03.760 return to the US. 0:10:04.040 --> 0:10:05.800 Yeah, I see that when I walk walk to Penn 0:10:05.840 --> 0:10:07.680 Station every day. I don't see them on Fifth anyone. 0:10:07.679 --> 0:10:09.559 So if you're gonna walk to Penn Station today to 0:10:09.760 --> 0:10:13.560 sit on this chair, you're are you taking this Korski home? Yeah? 0:10:13.760 --> 0:10:14.240 I might have to. 0:10:14.280 --> 0:10:16.360 I might be going to Hoboken today. Little problems with 0:10:16.400 --> 0:10:20.040 Penn Station here today, Dana, talk to us about the 0:10:20.200 --> 0:10:22.760 US consumer. Here, we got some retail sales numbers say 0:10:22.760 --> 0:10:25.679 a little bit weaker than forecast. Talk to us about 0:10:26.040 --> 0:10:29.040 I hear there's a bifurcation in the marketplace with the consumer. 0:10:29.280 --> 0:10:32.280 So overall I call the US consumer and today's numbers 0:10:32.280 --> 0:10:35.800 definitely highlight it squishy. We have a squishy US consumer, 0:10:36.160 --> 0:10:38.920 and frankly, it's every income level where we've seen a 0:10:39.000 --> 0:10:42.480 moderation and spend and we've seen that trade down. Look 0:10:42.520 --> 0:10:46.040 where the big sales increases are coming. Same store sales 0:10:46.080 --> 0:10:50.000 increases of better than three percent at the off pricers 0:10:50.240 --> 0:10:54.040 like TJX Ross Stores Burlington, they're getting the benefit of 0:10:54.040 --> 0:10:55.760 the trade down. And you take a look at the 0:10:55.800 --> 0:11:00.760 discounters they're getting that too. But overall, luxury sales are moderating. 0:11:01.080 --> 0:11:03.520 If you have newness and new trends, it's working. 0:11:03.800 --> 0:11:04.000 Tom. 0:11:04.000 --> 0:11:07.319 You're gonna like this wide leg denim jeans. The wider, 0:11:07.360 --> 0:11:09.440 the better, and that's the trend out there. 0:11:09.800 --> 0:11:11.120 Got better than skinny jeans. 0:11:11.240 --> 0:11:14.360 We go to surveillance, Fashion Icon and Lisa Mattel. Lisa, 0:11:14.360 --> 0:11:16.319 we're going to see you in wye jeans. 0:11:16.320 --> 0:11:18.840 Correct. I was told by my daughter that I am 0:11:18.880 --> 0:11:21.960 not cool because I wear skinny jeans. I have to 0:11:22.000 --> 0:11:23.600 go with the wide leg jeans in today. 0:11:23.760 --> 0:11:26.840 See what you learn on surveillance, rich make the single 0:11:26.880 --> 0:11:31.600 best idea with data and and and Lisa today, Paul continue, 0:11:31.720 --> 0:11:33.040 So if. 0:11:32.920 --> 0:11:35.920 I look at a Walmart, for example, what am I 0:11:35.920 --> 0:11:38.400 seeing at the Walmart basket? What's in a Walmart basket 0:11:38.440 --> 0:11:41.960 these days? Is it more essentials? Let's don't discretion. 0:11:42.160 --> 0:11:44.439 So think about what Walmart is. Nearly sixty percent of 0:11:44.480 --> 0:11:47.280 their business is grocery. Wow, so you're getting grocery in 0:11:47.320 --> 0:11:51.199 there plus the other merchandise, and it's a combination of both. 0:11:51.520 --> 0:11:54.760 And you're seeing consumers today, even with essentials, they're trading 0:11:54.800 --> 0:11:57.840 down to private label. I've heard about the pet stores recently. 0:11:58.120 --> 0:12:01.160 We're consumers for their pets. They're trading down to private 0:12:01.240 --> 0:12:02.480 label goods for their pets. 0:12:02.480 --> 0:12:04.760 Even we'll talk about single best idea, but I want 0:12:04.800 --> 0:12:09.079 to talk about the big money that everybody that follows 0:12:09.080 --> 0:12:11.679 surveillance follows with luxury. I remember, I think it was 0:12:11.760 --> 0:12:14.760 Laura Piano. It was like a billion dollar transaction. It 0:12:14.880 --> 0:12:18.280 changed the industry. This is years and years ago. Todds 0:12:18.400 --> 0:12:21.400 of Italy, which I would say is pretty conventional brand, 0:12:22.040 --> 0:12:25.000 spend over four hundred million dollars on a shoe brand 0:12:25.040 --> 0:12:30.640 nobody knows in America Roger Vivier. Explain why someone spent 0:12:31.040 --> 0:12:34.679 four hundred million dollars on a shoe that basically no 0:12:34.720 --> 0:12:36.680 one knows in America. 0:12:36.080 --> 0:12:39.920 Because what they see is the opportunity and acquire Roger Vivier. 0:12:40.320 --> 0:12:43.280 They feel that they have the creative talent to enhance 0:12:43.320 --> 0:12:47.120 the brand, open physical stores and distribution and make it 0:12:47.160 --> 0:12:50.280 a global brand. And they feel that their insights into 0:12:50.360 --> 0:12:53.640 the global customer will help drive that brand. When you 0:12:53.679 --> 0:12:57.000 think of brands that are smaller that where can you grow? 0:12:57.280 --> 0:13:00.880 I mean, I think one of LVMH's most significant transactions 0:13:00.880 --> 0:13:03.600 of the past few years has to be Tiffany. And 0:13:03.640 --> 0:13:04.840 look how they're reinventing. 0:13:05.080 --> 0:13:06.160 Is that working for them? 0:13:06.320 --> 0:13:10.040 Yes, they're getting more profit out of Tiffany. It's catering 0:13:10.080 --> 0:13:13.440 to a younger customer. Now they're modernizing and updating the 0:13:13.480 --> 0:13:16.480 stores and capturing a wider customer base. 0:13:17.160 --> 0:13:18.439 Tom Roger Vivier. 0:13:18.559 --> 0:13:19.800 It's on East sixtieth Street. 0:13:20.600 --> 0:13:21.920 Can go there and check it out today. 0:13:22.040 --> 0:13:25.640 Yes, she was there yesterday. It's why I brought it. 0:13:25.679 --> 0:13:28.360 Is it promotional right now? Now? I walked in the 0:13:28.400 --> 0:13:31.760 door and said, I'm saving you money? And is luxury 0:13:31.840 --> 0:13:32.960 promotional right now? 0:13:33.000 --> 0:13:33.080 Now? 0:13:33.320 --> 0:13:36.920 Inventory levels are lean for luxury. It's not promotional. The 0:13:37.080 --> 0:13:40.040 changes you have one of them raising prices like Chanelle. 0:13:40.200 --> 0:13:43.800 The others are holding and they're working on newness in 0:13:43.880 --> 0:13:44.800 order to drive demand. 0:13:45.440 --> 0:13:46.920 I don't have it in front of me. I'm sorry, 0:13:46.960 --> 0:13:49.760 I'm not brief done it but Dana Telsey, did Chanelle 0:13:49.800 --> 0:13:51.520 just throw somebody out on the street and they're going 0:13:51.600 --> 0:13:55.239 to bring in somebody new for design and all that looks. 0:13:54.960 --> 0:13:58.439 Like someone new is coming for over thirty years. No, 0:13:58.800 --> 0:13:59.400 it is not me. 0:14:00.400 --> 0:14:02.800 What does Chanelle need to do to recapture what they have? 0:14:03.440 --> 0:14:05.200 I mean, they're doing pretty well in terms of the 0:14:05.240 --> 0:14:09.199 gains they had, but I think overall the continued modernization 0:14:09.360 --> 0:14:13.000 and cut out the big price increases. They're not our mes. Yes, 0:14:13.040 --> 0:14:15.920 they're a luxury brand, but you can't go to the 0:14:15.960 --> 0:14:17.079 ilk of something. 0:14:17.720 --> 0:14:20.520 And Valentine and all the other outrageously expensive ones are 0:14:20.560 --> 0:14:21.800 all going to pull back prices. 0:14:22.040 --> 0:14:24.840 No, they're not pulling back prices. They're at the right level. 0:14:25.160 --> 0:14:28.280 Chanelle one higher than everybody else trying to capture a 0:14:28.320 --> 0:14:30.680 mez and our mez is in a different league than anybody. 0:14:31.120 --> 0:14:33.960 I didn't know that single best idea anybody talking to 0:14:33.960 --> 0:14:35.200 your clients about this the target. 0:14:36.560 --> 0:14:38.960 There's a couple that we're talking about Bathroom body Works 0:14:39.000 --> 0:14:41.160 and the inflection point to growth in the second half 0:14:41.200 --> 0:14:43.880 of the year. We're talking about t j X and 0:14:43.920 --> 0:14:48.200 the continued drum beat of increasing market share and increasing gains. 0:14:48.600 --> 0:14:52.200 We're talking about Costco because of the market share at gains. 0:14:52.480 --> 0:14:54.040 And we're also you know, we're talking about you talked 0:14:54.040 --> 0:14:55.800 about Denim Jean's, We're talking about Levi's. 0:15:00.600 --> 0:15:02.920 You're in San Francisco right now saying we got to 0:15:02.920 --> 0:15:04.480 go why jeans for Lisa Matail? 0:15:04.640 --> 0:15:07.360 Yeah, and it's working. Not only are they doing wide 0:15:07.400 --> 0:15:10.200 legs for Lisa, but take a look at their wholesale 0:15:10.280 --> 0:15:14.200 business where they've strengthened the distribution channels that they're going through. 0:15:14.400 --> 0:15:17.680 They're doing outfitting top to bottom with lifestyle, buy a 0:15:17.760 --> 0:15:20.720 shirt and buy the Janes, not just one, and they're 0:15:20.760 --> 0:15:22.640 capturing more of the women's customer. 0:15:23.080 --> 0:15:27.720 And finally, the miracle that is Abercranbrie and Fitch. Are 0:15:27.760 --> 0:15:31.800 you kidding me? How did they? I mean it's like GameStop? 0:15:32.200 --> 0:15:34.920 How did they do? And this is legit? How Dana 0:15:35.000 --> 0:15:38.440 Telsey over on Fifth Avenue they had Hunky Boy out 0:15:38.520 --> 0:15:41.520 in the street lined up. That all went away. Then 0:15:41.600 --> 0:15:42.600 what's happened doubled? 0:15:42.640 --> 0:15:45.960 Then what happened? Fran Horowitz came in as CEO she 0:15:46.160 --> 0:15:50.080 was there since twenty fourteen. Promoted to CEO. COVID gave 0:15:50.080 --> 0:15:52.800 her the time to assess data the store wasn't working. 0:15:53.160 --> 0:15:53.720 What do we do? 0:15:54.120 --> 0:15:56.760 She took a look at where she wanted her customer 0:15:56.800 --> 0:15:59.040 to be twenty five to thirty five? What do you 0:15:59.080 --> 0:16:01.920 need to give them? Outfits not items? Where do you 0:16:01.960 --> 0:16:05.760 need to sell it in stores that are inviting? Took 0:16:05.760 --> 0:16:09.280 away the fragrance, turned up the lights and now you 0:16:09.280 --> 0:16:12.040 can buy outfits and you wouldn't know it's the Abercrombie 0:16:12.080 --> 0:16:12.440 the past. 0:16:12.560 --> 0:16:16.760 One final question, No, no, I'm just amazed by one 0:16:16.800 --> 0:16:19.760 final question. I think it's supportant for our Boston audience, 0:16:19.800 --> 0:16:23.040 good morning, But across this nation? What is the pixie 0:16:23.120 --> 0:16:27.640 doest of TJX? How did they execute where so many 0:16:27.680 --> 0:16:28.400 others failed? 0:16:28.760 --> 0:16:29.200 You know what? 0:16:29.480 --> 0:16:32.760 They're people. They have the tenure of talent that have 0:16:32.880 --> 0:16:37.000 relationships with brands and merchants that they're able to assort 0:16:37.040 --> 0:16:41.880 the store better than others, capturing a wide price price assortment, 0:16:42.240 --> 0:16:46.200 capturing better brands and a value and opening compelling stores 0:16:46.240 --> 0:16:47.080 in great locations. 0:16:47.160 --> 0:16:50.000 What are the department stores that your heritage, your heart 0:16:50.040 --> 0:16:51.560 and soul is Bergdorf? Goodman? 0:16:51.600 --> 0:16:52.320 Is it? 0:16:52.360 --> 0:16:54.320 Is it around in five years? 0:16:54.440 --> 0:16:56.320 I think Bergdorf will be around in five years. I 0:16:56.360 --> 0:16:57.760 don't know who's going to own it. But I think 0:16:57.800 --> 0:16:59.080 it'll be around in five years. 0:16:59.480 --> 0:17:01.680 Do we still want to shop at department stores or 0:17:01.760 --> 0:17:04.000 we you know, is is Lisa going to be over 0:17:04.080 --> 0:17:06.000 at whatever? It's vivier today? 0:17:06.560 --> 0:17:09.160 You need new life to be breathed into the department 0:17:09.200 --> 0:17:10.919 stores because otherwise, what would you do? 0:17:11.119 --> 0:17:13.639 What would you do to your burg Lisa put the 0:17:13.680 --> 0:17:18.119 windows back on Fifth Avenue? That was Daylight, our original. 0:17:19.119 --> 0:17:22.080 On Fifth Avenue? Burgdorfs has What would you do to Burgdorf? 0:17:22.680 --> 0:17:25.040 I mean to Burgdorfs, I'd almost take a look at 0:17:25.080 --> 0:17:29.280 my customer base, invite them in capturing that younger customer base. 0:17:29.560 --> 0:17:32.639 Have events in the store and see what exclusives and 0:17:32.720 --> 0:17:35.880 limited collections designers can give so that you can only 0:17:35.880 --> 0:17:36.760 get it at Burgdorfs. 0:17:36.800 --> 0:17:38.560 Would I know by them. 0:17:38.440 --> 0:17:40.360 That's what it feels like. Would be the one look 0:17:40.359 --> 0:17:42.760 at lots of Mauritane in Paris. If you visit a 0:17:42.800 --> 0:17:46.000 lost of Mauritane in Paris, We're going to it's beautiful. 0:17:46.119 --> 0:17:48.679 Absolutely, We're taking the show to Paris in the fall. 0:17:48.720 --> 0:17:49.240 I'll join you. 0:17:49.400 --> 0:17:52.280 proNT right at the top of front on the old restaurant. 0:17:51.800 --> 0:17:52.400 Which is unning. 0:17:53.160 --> 0:17:53.920 Yes, it's done. 0:17:54.080 --> 0:17:57.040 Kill that. Don't use clothes. I mean, all the kids, Lisa, 0:17:57.440 --> 0:17:59.200 they want to go to you. They don't want to 0:17:59.240 --> 0:18:02.440 go to or whatever. They want to go to hand 0:18:02.440 --> 0:18:03.360 me down store. 0:18:03.240 --> 0:18:06.400 The consignment shops because you can get the great deal, 0:18:06.440 --> 0:18:08.879 the great brands for a lower price and old is 0:18:08.920 --> 0:18:09.920 new again. There you go. 0:18:10.400 --> 0:18:12.240 Okay, Dana Telsea, thank you so much. 0:18:12.359 --> 0:18:12.639 Thank you. 0:18:12.680 --> 0:18:16.600 It's great. And if Paul said, what what Telsey Advisory 0:18:16.640 --> 0:18:18.800 Group did? I remember the first day she came out, 0:18:18.800 --> 0:18:20.000 I was like, yeah, you know whatever. 0:18:20.160 --> 0:18:22.119 Well, it's interesting, Thomas. You know, there was a period 0:18:22.119 --> 0:18:24.200 of time, maybe fifteen years ago where a lot of 0:18:24.240 --> 0:18:27.960 animals left his cell side because they changed the business rules. 0:18:28.000 --> 0:18:29.960 Elliot Spitzer all that with the investment banking took a 0:18:29.960 --> 0:18:31.359 lot of the economics out of the business. Whole lot 0:18:31.359 --> 0:18:33.199 of animals went to the cells, went to set up 0:18:33.200 --> 0:18:36.879 their own shops. I'm talking dozens of ir number one animals. 0:18:37.040 --> 0:18:37.920 Yes, I can. 0:18:37.680 --> 0:18:41.320 Count three or four on my hand that are survived 0:18:41.320 --> 0:18:44.560 and thrived. Dana's one of them surviving, yeah, and and 0:18:44.760 --> 0:18:47.680 and thriving. You know, it's just it's a tough business. 0:18:47.760 --> 0:18:50.000 You should see her do a channel check like in 0:18:50.040 --> 0:18:52.959 your mess. Oh my god. The whole place that the 0:18:53.040 --> 0:18:55.600 staff freezes comes in the door. They just. 0:18:57.240 --> 0:18:59.639 Job their jobs, go to the malls and go to 0:18:59.720 --> 0:19:01.680 store and I don't know, and they do that on 0:19:01.800 --> 0:19:03.119 like that Friday after Thanksgiving. 0:19:03.240 --> 0:19:06.119 It's seventy percent of our economy. Are you bullish on 0:19:06.200 --> 0:19:07.000 retail quickly? 0:19:07.359 --> 0:19:07.600 Yeah? 0:19:07.640 --> 0:19:11.000 I think there's opportunities in retail. You know why singles 0:19:11.400 --> 0:19:14.040 come on see? I mean it definitely is TJX. It's 0:19:14.040 --> 0:19:15.199 going to keep moving higher. 0:19:15.560 --> 0:19:17.360 Dana, thank you so much. 0:19:17.359 --> 0:19:18.280 Just had a nice run. 0:19:21.400 --> 0:19:24.040 This is a joy. It's a three hour conversation with 0:19:24.160 --> 0:19:27.560 Russier Sharma with a book talked about what went wrong 0:19:27.640 --> 0:19:31.719 with capitalism. Can't say enough about it. Hugely readable, like 0:19:31.760 --> 0:19:34.680 all let's work you redefine the commodity super psycle years 0:19:34.720 --> 0:19:38.000 ago holds court at the Rockefeller Foundation. It's been way 0:19:38.040 --> 0:19:40.879 too long. Come back again. We'll do a two segment 0:19:41.200 --> 0:19:45.080 interview to talk about fourteen other things. Megan Decai at 0:19:45.320 --> 0:19:50.160 LSE has a definitive book on the success and failure 0:19:50.240 --> 0:19:55.959 of Marxism called Marxist Revenge. The exploitation is still in 0:19:56.000 --> 0:19:58.080 the air, and there's a lot of people out there 0:19:58.119 --> 0:20:02.800 that feel with capitalism. What went wrong with capitalism is 0:20:02.840 --> 0:20:07.200 an exploitation of so many within society. Is that where 0:20:07.240 --> 0:20:10.480 we are today, back with MAGNETSI and Marx. 0:20:10.760 --> 0:20:13.440 No Tom, I make exactly the opposite point in the book, 0:20:13.640 --> 0:20:16.359 which is the fact that capitalism is no longer being 0:20:16.400 --> 0:20:19.080 allowed to work. What we have today is a very 0:20:19.200 --> 0:20:23.040 distorted form of capitalism. Capitalism at its core is supposed 0:20:23.040 --> 0:20:28.240 to be pro competition, pro churn, pro creative destruction. Instead, 0:20:28.280 --> 0:20:31.399 what we have today is a capitalism that is viewed 0:20:31.720 --> 0:20:34.960 as being pro big business, pro incumbent. And what I 0:20:35.040 --> 0:20:37.600